TOKYO: High-yielding emerging market currencies suffered big losses against the dollar on Monday in Asia after strong US jobs figures renewed the case for a Federal Reserve interest rate lift-off this year.
The South Korean won and the Malaysian ringgit slumped more than one percent, while the Indonesian rupiah was also down as weak Chinese trade data also took their toll.
The greenback also hit a fresh two-month high against the yen after US Labor Department data on Friday showed the world’s top economy added 271,000 net new jobs last month, almost double that seen in September.
The data suggested that worries were overblown of an emerging markets growth slowdown infecting the US economy.
The greenback rose to 123.33 yen from 123.16 yen Friday in New York, after sitting at 121.66 earlier Friday in Asia.
China on Sunday reported disappointing trade figures that took a bite out of emerging and commodity-linked currencies, with imports into the world’s number two economy falling almost a fifth in October from a year ago. Exports also continued to fall on lacklustre foreign demand.
“The strong dollar is central in this move today as the non-farm payrolls was very strong,” Nizam Idris, head of currencies and fixed-income strategy at Macquarie Bank Ltd. in Singapore, told Bloomberg News.
“China news was poor and that didn’t help.”
Higher-yielding, or riskier, emerging units have been hit hard this year on fears of a flight of capital to the United States as dealers look for better, safer investments on the back of the looming US rate lift-off.
The greenback had suffered a heavy sell-off against the emerging currencies in October, however, as the US Fed considered putting off a rate hike until 2016 owing to weakness in the global economy, particularly China.
“With the US rate hike on the horizon, a drop in imports puts the focus on the slowdown in the Chinese economy, and falling resources prices or emerging stocks may bolster risk aversion,” Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading services provider, wrote in a note to clients.
“In that environment, the dollar and yen will be bought.”
The won lost 1.3 percent against the dollar, while the ringgit was down 1.3 percent and the rupiah dropped 0.7 percent.
In other deals, the Singapore dollar ticked down 0.1 percent, the Thai baht edged 0.2 percent lower and the Taiwan dollar also fell 0.2 percent.
The euro rose to $1.0769 and 132.82 yen from $1.0742 and 132.30 yen in US trade.